PSVR is the biggest success story of consumer VR; but Sony's location-based plans will leave it a long way outside its comfort zone

For an industry accustomed to straightforward platform launches like game consoles, which have relatively simple metrics for success or failure, the arrival of consumer VR has been a little tricky to process in some regards.

VR isn't just a platform; it's a collection of platforms orbiting around a core concept that is, itself, still very much in flux. Figuring out whether it's 'succeeding' or not really depends on how you define and measure success, on which sets of figures you choose to believe, and on where you think the market is headed overall - none of which are questions with widely accepted answers right now.

One certain winner that has emerged over the past year has been Sony, whose PSVR headset has benefitted immensely from a combination of relatively low pricing, accessibility (via the huge PS4 installed base) and great hardware design (it's arguably the most comfortable of the headsets on the market right now, and performs minor technical miracles despite its comparatively low specs). As a result, it's the clear leader in the high-end VR headset space; PSVR's installed base is streets ahead of that of rivals such as HTC or Oculus.

"There's almost certainly a bright future for VR in location based gaming - perhaps brighter, even, than the one that exists for home VR solutions"

A report in this week's Wall Street Journal, however, implies that Sony isn't internally happy with the performance of PSVR, and is looking for new outlets for the technology - specifically, pushing it towards location-based entertainment (arcades and their ilk) in Japan. That the company with the most successful platform seemingly feels this way about it is a pretty good indicator of just how ill-defined notions of success in VR are right now, and it's also a slightly odd statement given that PSVR has been back-ordered at retail in many regions for most of its life-span to date.

All the same, it's unsurprising that Sony would seek other outlets for its VR technology. The reality is that nobody's quite sure what VR is actually going to be used for; we know that the technology is now affordable and effective, but the huge looming question of what consumers are actually going to want to do with it is still unanswered.

Considering that, Sony - and other VR firms - really ought to be pushing the technology in every direction they can. The core notion of VR right now is that people are going to sit (or stand) at home playing games with the headsets, but while that seems logical enough, it's actually largely unproven. We don't yet know how a wider consumer audience will react to the idea of strapping on a headset for a solo gaming experience in the home; given the (quite deliberate) isolating effect of VR and the need for complex setups for more advanced VR devices, it may well be something that never finds a major home audience. Questions also remain over the willingness of players to engage with lengthy VR games, rather than short experiences.

Meanwhile, there are plenty of other worlds of opportunity to explore. VR has potential applications in a host of areas beyond games, from architecture and tourism to scientific research and even to some promising therapeutic applications. Such uses for VR technology are an important area to explore, not just as potential side-shows to the gaming "main event", but also because it could well turn out that this technology - to some extent still an answer begging a question - only becomes a true commercial hit once it is matched against an unexpected field of usage.

"For consumer entertainment, there's a strong possibility that VR will primarily be something you go and do socially"

Within that, out-of-home or location-based entertainment is definitely a fascinating field. Where putting on a VR headset at home may be unappealing, and setting up the kit for room-scale VR may simply be impossible for a majority of consumers, the idea of being able to go to a location and enjoy a VR experience is potentially very powerful.

For consumer entertainment, there's a strong possibility that VR will primarily be something you go and do socially, rather than something you buy and engage with alone in your home. (I'm reminded of the fact that Star Trek's holodecks, a constant touchstone of inspiration for many involved with VR, were something characters went to in the company of friends and colleagues, not something they plugged into in their own quarters; of course, this was as much for dramatic reasons as anything else, but the scriptwriters may also have been on to something regarding the context in which most people are willing to accept that kind of virtual experience.)

For Sony, however, a focus in this area may be a misstep - at least with the hardware they're presently using for VR. Sony's enormous advantage in VR right now is the ubiquity of the PS4 and the low cost of its headset; that lies in the balance against the fact that PSVR is a lower spec and less flexible VR solution compared to those being offered by its more expensive competitors. In the consumer market, that's a no-brainer; the number of people interested in trying a relatively cheap plug-and-play VR system for a console they already own vastly outstrips the number willing to buy a very expensive, complex VR system for a PC they'll likely have to upgrade in preparation.

In location-based gaming, however, the equation no longer balances quite so clearly in Sony's favour. A location-based game operator has quite different motivations in their choice of hardware to a VR-curious consumer. For a location based game, a few hundred dollars extra for a notably higher quality of experience is easily justified; after all, setting up the rest of the location is probably costing many thousands if not tens of thousands of dollars, so skimping on something as core as the VR headset itself would be bizarre. Moreover, extra functionality like room-scale VR or precise controllers will often simply be non-negotiable, depending on the kind of experience being created.

"It's unlikely that any VR solution using a PS4 will ever be as flexible, in software rollout terms, as a straightforward PC"

On top of that, while the ubiquity of the PS4 has been a major asset to PSVR as a consumer device, its nature as a closed console platform will be anathema to many location-based game operators. Such operators often develop their own software, in-house or through a third-party contractor; having to jump through Sony's hoops to get software onto PSVR makes sense for consumer games, but not for a location-based game operator who only plans to roll out the software to a handful of locations at most. Sony could, in theory, create a channel for such companies that bypasses the red tape, but it's unlikely that any VR solution using a PS4 will ever be quite as flexible, in software rollout terms, as a straightforward PC.

It's important not to discount the Sony factor in all of this; it's a big, well-respected company that a lot of operators may be happy to work with, especially given that as a hardware manufacturer its devices are both robust, and backed up effectively with warranties and repair systems (important given the wear and tear a location-based game VR headset will be subjected to).

However, for a lot of companies in this field, Sony's offering simply won't appeal in its current form - especially given the risk of ending up stuck on a platform that's rapidly getting more and more outdated, while rivals who ran with PC-based solutions are able to continue upgrading to the latest and greatest devices without seriously overhauling their systems and software.

There's almost certainly a bright future for VR in location based gaming - perhaps brighter, even, than the one that exists for home VR solutions. For Sony, however, it'll take more than just industry outreach and good intentions to capture a major slice of that market. In PSVR, it has created the ideal device for contemporary home VR; affordable enough to appeal to consumers, well designed and technologically capable of remaining in the same ballpark as much more expensive rivals.

Many of the trade-offs made in the process, however, are the opposite of those that location-based gaming requires. While, knowing Sony's scale, it would be wrong to describe its location-based outreach as a distraction from the real task at hand; the point remains that PSVR's success or failure is going to come from its appeal as a consumer device, and what's important to it right now is not selling to new markets, but getting the software on-board to convince as-yet uncertain consumers to try VR.

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I will try and make these observations brief. I would love to give a more authoritarian response to the reality of the ‘whole’ Out-of-Home Entertainment market, and would extend the offer for a report to GamesIndustry.biz – as they will be aware I have championed this approach to the business since the early days, and now it’s becoming “more than a thing”, a new point-of-view from people working in the sector may be of benefit?

To Mr. Fathey comments:

“…pushing it towards location-based entertainment…in Japan…”
I know that this is based on the WSJ feature, but it may have been better to get another source. Sony has already started this process then considering entering – and the recent JAEPO show in Japan had an example of the Koei Tecmo VR amusement pieces that uses PSVR. Also, its incorrect to thing this initiate is only for Japan – its international!

“…slightly odd statement given that PSVR has been on back-order…”
I think Sony may be thinking about the big picture, especially looking at the approach from their closest rival in high-end VR HMD’s – HTC has been actively soliciting the out-of-home entertainment market, and seen fantastic reactions, even outside the natural Asian market!

“…unlikely that any VR solution using PS4 will be flexible...”
We need to not jump the gun, and remember our history – Sony depended on their ability to be flexible in development when they licensed arcade hardware for their PS series from NAMCO in the early days of the 90’s. The company has a considerable background working with amusement companies and will build on that.

“…wear and tear of location-based games…”
Very true – the need to follow the three-R’s (Resilience, Robustness, Ruggedness). I would feel that in the short term (as with HTC) this is a toe-into-the-water as the company establishes a division to support the needs of the out-of-home entertainment sector.

These are just a snapshot of observations. It’s now for GamesIndustry.biz to consider if a more focused piece on how out-of-home entertainment is shaping the latest phase of investment in VR, as many consumer developers pivot in considering this business.

I dont believe for a second that Sony is disappointed in their numbers, and that they are thinking about a shift. I call BS.
The GIANT issue of location based VR, is first it better be ten times better than a home experience, (I dont see that happening) and second , you really think people want to swap sweaty nasty headsets? Its disgusting.
I've been around video games for as long as there have been video games, location based arcades died in the 80's because of one simple thing, the home console games started to come close to approximating the same games in arcades. Given the choice, we have already seen how this plays out. People prefer to play at home.

So unless there is some secret VR holodeck like gaming platform and experience out there, location based VR is a non starter especially here in the US.

I don't see a huge market for standalone VR parlors. I do see a place for them at Dave and Busters and such. They have spaces with golf games you play with real clubs and such to rent, using the old motion simulator space or something for VR cubicles might not be the worst idea.

IMO it needs to be tailor made for groups to play, with 30,60 and maybe a single 90 min experience, no more. Go in, eat dinner, play VR, top it off with some skeeball and split. People want an evening destination where VR takes the place of a movie. "Dinner and a Movie" cinemas are a huge growth industry, just as D+B brought back arcades. And since it's a lot more expensive to set up and run than an Escape Room location, the extra revenue from food and beveridge would be important.

I pwrsonally believe that without an existing arcade business, and given the current limitations of PSVR on both the goggle and the hardware level, that it's far more likely that they'll buy from Oculus and Vive, both of which are turnkey, ready to go, and fully patchable, optimizeable, and upgradeable. Sony would likely do well to partner with one of them, rather than kludge together PSVR 2 like they did the first one from their existing products.

I'm not sure where this narrative of Sony not being happy with the performance of PSVR comes from. It's been hard to find the headset in stock since launch and they have stated their sales are doing better than expected, and the worst I have heard is its on track sales wise. It feels like everyone expects or wants PSVR to be another vita for some reason. I love the PSVR, i hope it continues to gain momentum and does well, it's an amazing device.

@Todd Weidner:
>"...I've been around video games for as long as there have been video games, location based arcades died in the 80's... "

It's those sweeping assumptions that I love to see - assumptions, an example that some one does not understand the question, or has no facts.

You are confusing your perception of "arcade" business with the out-of-home entertainment sector. The arcade was the term generalized by those outside of the industry, when in-fact it was the video amusement industry that you were looking at.

According to you, the recent success of Star Wars Battle Pods Arcade, or the new digital Dark Rides never happened as they are not your perception of the coffin shaped coin-guzzlers from the 80's and 90's. I understand that its a difficult industry, and we do not get the coverage we once did, but do not make sweeping assumptions without some more experience that distant badly remembered recollections!

The current Digital Out-of-Home Entertainment (DOE) sector is on the ascendance as you would have known before assuming. The news of the latest The VOID VR arena-scale experience, or the investment being made by the likes of Sony and HTC into location-based entertainment centers based around their hardware. And that is just VR, the new immersive simulators and theme park rides have been leading the immersion charge for years - though as DOE does not buy advertising in the consumer games scene, coverage is muted!

While they'd likely produce ruggedized versions of the hardware, the PSVR is itself a kludge. It's basically HMD with Move slapped on

Both of those products lost a lot of money. And I'm going to doubt that PSVR is even close to paying off the subsidies and software development they put into it. So yes, they're likely not happy with the sales, and I'm also skeptical they'd do anything to actually change the platform. They're looking for ways to monetize it and get ROI now, and they don't have the same avenues that PC based VR does, or even the Skype advantage MS has.